Morning News

Source: Wall Street Journal  

**Market Overview**  

The ceasefire between Israel and Iran took effect, leading to a rise in U.S. stocks. The three major U.S. stock indices gained over 1%, closing at their highest levels in nearly four months, with the Nasdaq 100 hitting a record high for the first time in four months. The sharp drop in oil prices benefited airlines, with American Airlines rising over 4%. Chip stocks outperformed the broader market, with Broadcom up nearly 4% and Nvidia gaining over 2%. Tesla bucked the trend, falling over 2%. FedEx's weaker-than-expected quarterly guidance caused its after-hours shares to drop over 5%.  

Powell reiterated a wait-and-see stance but struck a balanced tone on the prospect of rate cuts, leaving the door open for earlier cuts. U.S. bond prices accelerated higher, with yields hitting a six-week low. The dollar index extended its decline during the session, nearing a three-year low, while the yen rose over 1% and the euro hit a nearly four-year high.  

Bitcoin surged over $3,000 at one point, breaking the $10,600 mark.  

Easing tensions in the Middle East led to a second consecutive day of sharp declines in oil prices, with crude falling over 6% intraday to a more than two-week low, erasing all gains since the Israel-Iran conflict. Gold fell over 2% intraday, with futures closing at their lowest level this month.  

During the Asian session, A-shares rose on higher trading volume, with the Shanghai Composite Index reclaiming the 3,400-point mark. Robotics stocks surged, while the Hang Seng Index rose over 2%, returning to the 24,000-point level as tech stocks rallied. Commodities and government bonds both declined.  

**Key News**  

China's central bank and five other departments issued a document promoting financial support for consumption: a 500 billion yuan re-lending facility for service consumption and elderly care will be established, and financial products tailored to household wealth management needs will be innovated to increase residents' property income.  

On the first day of his congressional testimony, Powell reiterated a cautious stance, stating that the Fed could wait for more data before acting but did not rule out earlier rate cuts, emphasizing that many paths are possible and that June and July data will be crucial. The "New Fed News Agency" noted that Powell left open the possibility of a July cut but hinted that waiting until at least September is more likely.  

Ahead of Powell's testimony, Trump once again called for rate cuts, urging the Fed to lower rates by at least two to three percentage points.  

Israel stated that after a call between the U.S. and Israeli leaders, it halted further military strikes against Iran and plans to fully reopen its airspace. Iran's president expressed readiness for dialogue at the negotiating table, declaring an end to the 12-day war with Israel. Chinese Foreign Minister Wang Yi spoke with his Iranian counterpart, stating China's support for Iran in achieving a genuine ceasefire while safeguarding national sovereignty and security. U.S. media reported that preliminary U.S. intelligence assessments suggest the weekend strikes did not "completely destroy" Iran's nuclear facilities and may have only set back its nuclear program by a few months.  

With the deadline for the U.S. tariff suspension approaching, the EU is preparing additional counter-tariff measures to pressure the U.S. Asian exports to the U.S. have surged, with several economies hitting record highs.  

Jensen Huang has begun selling Nvidia shares and could cash out $865 million by year-end.  

JPMorgan: Strong growth in data center capital expenditure could drive Asian tech stocks up another 15-20% this year.  

**Market Closing Prices**  

**Global Stocks**: The S&P 500 rose 1.11% to 6,092.18 points. The Dow Jones Industrial Average gained 1.19% to 43,089.02 points. The Nasdaq climbed 1.43% to 19,912.53 points. Europe's STOXX 600 index rose 1.11% to 540.98 points.  

**A-Shares**: The Shanghai Composite Index rose 1.15% to 3,420.57 points; the Shenzhen Component Index gained 1.68% to 10,217.63 points; and the ChiNext Index advanced 2.3% to 2,064.13 points.  

**Bond Markets**: By the close, the yield on the 10-year U.S. Treasury note was approximately 4.29%, down about 6 basis points for the day. The 2-year Treasury yield was around 3.83%, down about 3 basis points.  

**Commodities**: WTI September crude futures fell 6.04% to $64.37 per barrel. Brent August crude futures dropped 6.07% to $67.14 per barrel. COMEX August gold futures fell 1.8% to $3,333.90 per ounce. LME tin closed down 1.1% at $32,319 per ton, while lead rose 0.8% to $2,019 per ton.

**Key News Details**  

**Global Highlights**  

**Financial Support to Boost Consumption!** China's central bank and five other departments announced the establishment of a 500 billion yuan re-lending facility for service consumption and elderly care. They will innovate financial products tailored to household wealth management needs to increase residents' property income. The *Guidance on Financial Support to Stimulate and Expand Consumption* emphasizes actively promoting auto loans, setting reasonable loan terms and interest rates based on borrowers' creditworthiness and repayment capacity, and waiving penalties for early loan repayments during trade-in programs. The document also supports eligible consumer infrastructure projects in issuing REITs and encourages pilot regions to promote the use of digital RMB in consumption.  

**Powell's First Day of Congressional Testimony:** Reiterated a wait-and-see stance but left the door open for earlier rate cuts, stressing that June and July data will be crucial. When asked about the possibility of a July rate cut, Powell said, "Many paths are possible," adding that weaker-than-expected inflation or a softening labor market could justify earlier cuts.  

**Powell's Testimony:** The Fed is in a favorable position to remain patient and wait for clearer economic signals before adjusting policy. This year's tariff hikes may push prices higher and pressure economic activity.  

During the Q&A, Powell noted that June and July data would reveal the inflationary impact of tariffs, with consumers likely bearing at least part of the cost. The Fed's reluctance to cut rates stems from inflation risks and tariff-related uncertainties. If inflation is controlled, the Fed will cut rates sooner rather than later but refrained from specifying a timeline. A strong labor market and rising inflation would delay cuts.  

Powell also stated that the dollar remains the top safe-haven currency, dismissing claims of its decline as exaggerated. He expects U.S. economic growth to slow this year, partly due to immigration issues, and acknowledged AI's potential to displace jobs, though its current impact is unclear. He dismissed Trump's threats to the Fed's independence and questioned whether Trump could appoint himself as Fed chair.  

**"New Fed News Agency":** Powell did not rule out a July cut but hinted that September is more likely.  

**Before Powell's Testimony, Trump Again Urged Rate Cuts:** Trump pressured the Fed, claiming there is no inflation and the economy is strong—the U.S. should cut rates by at least 2-3 percentage points, saving $800 billion annually. He suggested raising rates later if conditions worsen and criticized Powell as a "stubborn fool."  

**Fed's Bostic Pushes Back:** Warns inflation could rebound, urging caution on tariff effects. Atlanta Fed President Bostic (2027 FOMC voter) struck a hawkish tone, saying no rush to cut rates and expecting at most one cut this year. He warned that tariffs could force businesses to raise prices and emphasized maintaining a tight policy stance until Q4 to ensure inflation targets are met.  

**Another Fed Official Weighs In:** If tariffs don’t fuel inflation, cuts are possible. Chicago Fed President Goolsby (2024 FOMC voter) noted subdued inflation in recent data and said the U.S. could stay on a "golden path" if tariffs don’t push prices up.  

**Israel-Iran Ceasefire:**  

- Israel’s PM office said further military strikes were halted after a call with Biden. Iran’s president expressed readiness for dialogue, declaring the 12-day war over and reconstruction begun.  

- Israel claimed its strikes set back Iran’s nuclear program by years. The transport minister announced plans to fully reopen airspace.  

- Qatar’s PM hopes to resume Gaza ceasefire talks within two days and urged Israel not to escalate military actions.  

- China’s Wang Yi voiced support for Iran in achieving a genuine ceasefire while safeguarding sovereignty.  

- U.S. media reported initial assessments that strikes only delayed Iran’s nuclear program by months, not destroying it.  

- Trump criticized both Israel and Iran for violating the ceasefire, claiming Iran’s nuclear capabilities are gone.  

- Israel’s defense minister vowed "strong strikes" on central Tehran in response to alleged violations.  

**EU Prepares Tariff Countermeasures Against U.S.** Ahead of the July 9 deadline, the EU is coordinating internal positions to pressure the U.S. with additional tariffs.  

**U.S. Tariff Deadline Nears, Asian Exports Surge:** Taiwan’s May exports to the U.S. jumped nearly 90%, with Vietnam and Thailand up 35%. The surge may reverse if high tariffs take effect in July.  

**Jensen Huang Begins Selling Nvidia Shares,** potentially cashing out $865 million by year-end. SEC filings show he sold $14.4 million worth of shares under a prearranged plan.  

**JPMorgan: Data Center Spending Boom Could Lift Asian Tech Stocks 15-20% This Year,** with AI stocks driving gains.  

**Domestic Macro**  

- Land auctions cool as developers turn cautious, with Hangzhou’s market showing a "core stable, periphery weak" trend.  

- Secondary home markets show mixed signals: entry-level demand rises in top-tier cities, while luxury sales hit records. However, high inventory pressures persist, with nationwide listings up 15% and prices falling for four straight months.  

- China’s National Day military parade on September 3 will feature domestically developed equipment, including next-gen forces like drones and hypersonic weapons.  

**Domestic Companies**  

- Mainland investors reduced Tencent holdings post-April peak, with港股通 ownership dropping below 11%.  

- Tencent’s major shareholder Naspers may sell Meituan stakes to fund its Brazilian subsidiary iFood, citing Meituan’s low odds of global success.  

- Instant retail competition heats up as platforms blur e-commerce and food delivery lines.  

- Labubu vs. Moutai: BofA notes generational differences, with Labubu appealing to emotional value while Moutai serves as a "social lubricant."  

- Starbucks denies selling its China business despite five straight quarters of declining same-store sales.  

**Overseas Macro**  

- U.S. "Big Beautiful" bill faces a July 4 deadline, with GOP pushing Senate passage amid disputes over Medicaid and renewables.  

- Germany plans to double defense spending to 3.5% of GDP by 2029, borrowing €1 trillion over a decade.  

- BIS warns stablecoins pose systemic risks, echoing TerraUSD collapse concerns.  

- South Korea’s central bank advocates gradual stablecoin adoption, starting with banks.  

- Analysts predict a dollar downtrend until 2027, driven by U.S. debt pressures.  

- LME copper stocks plunge 80%, raising fears of a historic short squeeze.  

**Overseas Companies**  

- U.S. defense giants like Lockheed deepen European ties to win contracts, including missile production with Rheinmetall.  

- 28-year-old Scale AI founder Alexandr Wang’s rise: a dropout turned billionaire after a fridge theft inspired his AI startup, now partly acquired by Meta for $14.3 billion.  

**Sectors/Themes**  

1. **Pumped Storage Power:** Demand peaks expected in 2028–2030, with 120 units/year needed.  

2. **Autonomous Driving:** Tesla’s L4 vision tech may accelerate Robotaxi commercialization.  

3. **H-Acid:** Price hikes and capacity exits could benefit dye industry players.  

4. **PET Bottle Chips:** Production halts may tighten supply, improving margins.  

**Today’s Preview**  

- BOJ releases June meeting minutes.  

- NATO summit in The Hague (June 24–25), Trump attending.  

- Summer Davos Forum (through June 26).  

- U.S. May new home sales, EIA crude inventories.  

- Powell’s Senate testimony.  

- Nvidia’s shareholder meeting.  

*Disclaimer: Views are personal and not investment advice. Accuracy, completeness, and timeliness are not guaranteed, and no liability is assumed for losses arising from reliance on this information.*